Symptoms
In K2 SmartForms, when the value "True" is transferred by a "Transfer Data" rule to a Drop-Down-List which has a SmartObject configured, this does not work in Runtime. The value simply does not display in the Drop Down List (and will display the default value which in this case was "False").
Diagnoses
We tried with different wording, like "Yes" and even used capitalization - "true", "True" and "yes", "Yes".
Resolution
It seems the only workaround for this issue is to use the "Choice Control" which can also be set to display as a Drop Down List in the properties. When using a "Transfer Data" rule to set it's value in Runtime, this works as expected.